Targacept Unveils Stellar Depression Drug Data: BioBuzz

WINSTON-SALEM, N.C. ( TheStreet) -- There are times when clinical data crosses the wire and you do a double take, not quite believing what you're seeing.

Last night, after Targacept ( TRGT) announced the data from its phase II study of TC-5214, was one of those times.

Depression patients treated with the combination of TC-5214 plus Celexa (marketed by Forest Labs ( FRX)) demonstrated a 6-point improvement on the Hamilton Rating Scale for Depression, or HAM-D, compared to patients treated with Celexa alone.

A reporter from a Winston-Salem newspaper emailed me last night to get my impression of this result. The only thing I could think to respond back with was, "Holy $%@!! That's kick-a-- good!"

As I wrote last week in a preview note on the TC-5214 data, investor expectations going into Thursday night's data presentation in Chicago were high, but not 6-points-on-the-HAM-D high. I think people would have been happy with anything greater than a 2-3 point improvement.

TC-5214 hit all the secondary endpoints of the study, too, including the Montgomery-Asberg Depression Rating Scale, or MADRS, where TC-5214 plus Celexa demonstrated a greater than seven-point improvement over Celexa alone.

The safety and tolerability of TC-5214 was clean, with resolvable adverse event rates of nausea, constipation and dizziness in the single digits.

This is a phase II study, so TC-5214 still has to prove itself in large phase III studies, but right now, Targacept's drug looks a lot better than Bristol-Myers Squibb's ( BMY) Abilify, which received an expanded FDA approval as an add-on treatment to anti-depressant therapy in late 2007.

The bulk of Abilify's $2 billion-plus in sales in 2008 were for schizophrenia, but a Needham analyst estimates that $500 million in Abilify sales this year will come from the add-on anti-depressant market.

I spoke with Targacept CEO Don DeBethizy last night from Chicago. "The data are pretty amazing. I think people expected the TC-5214 data to be good, but we were careful not to hype it in advance. One thing I've learned with age is to recognize that you don't need to do that when the data are that good."

Targacept has been sharing these data with potential Big Pharma partners since July under confidentiality agreements, said DeBethizy, with the intent of signing a co-development deal for the drug soon.

The company would like to get a deal done then move on to start phase III studies of TC-5214 as add-on therapy for depression, he says.

"Two-thirds of depressed people do not achieve relief from an SSRI alone -- that's more than 9 million people," says DeBethizy, referring to the most common class of anti-depressants. "We believe that a well-tolerated drug like TC-5214 as add-on therapy will be a major breakthrough for these patients"

Targacept shares closed Thursday at $20.09 in advance of the TC-5214 presentation last night at 6 p.m. EDT.

-- Reported by Adam Feuerstein in Boston

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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